More than 6 out of 10 workers and 4 out of 5 companies around the world operate in the informal economy. Contrary to previous predictions, informality has not decreased over time, but rather increased in many countries. Informal economies are typically characterized by high rates of poverty and severe lack of decent work. Without formalization, decent work for all and equity in society will remain an illusion. In 2015, the ILO adopted the Recommendation for the Transition from the Informal to the Formal Economy. This recommendation is a powerful tool to move towards achieving the SDGs. In recent years, an increasing number of countries around the world have developed strategies and policies to facilitate formal transitions. Social partners are also developing relationships with workers and businesses in the informal economy.
Economic formalization is a complex and long-term process that often requires a combination of legal and regulatory interventions with interventions aimed at promoting productivity and the ability to generate wealth. For a segment of the workforce, reducing the decent work deficit is a step toward gradual regularization in the long term. The significant reduction in informality in some countries shows that it is almost possible to achieve results.
